Official: Thousands of vacation home owners dodge taxes

February 28, 2018

HILO, Hawaii (AP) — Owners of more than 6,000 vacation homes on the Big Island have collected money from short-term renters without registering with the state or paying required taxes, a Hawaii tourism official said.

Ross Birch, executive director of the Island of Hawaii Visitors, reported the information last week to the Hawaii County Council.

The county and the state are working on several measures to fix the problem, West Hawaii Today reported .

The county proposal to hold owners accountable is on hold amid a Board of Ethics review into whether North Kona Councilwoman Karen Eoff has a conflict of interest because she owns a vacation condo in the Vacation District.

The proposal would require existing transient vacation rentals outside of the Vacation District, the General Commercial District or Resort Nodes to apply for a nonconforming use certificate in order to be grandfathered in. Those in the allowed districts would be required to register with the county, but they don’t have to apply to the Planning Department for a nonconforming use permit.

Matt Middlebrook, head of Airbnb’s public policy for Hawaii, said it has not taken a stance on the bill.

“We’re hopeful that county government listens to those members of the community as well, and their concerns are included in any legislation,” Middlebrook said.

The state’s bill would provide a mechanism for brokers such as Airbnb to collect taxes on behalf of the state. The proposal passed the Senate and is now being considered in the House.

The latest bill contains enforcement measures that require the internet booking platforms to verify the legality of a vacation rental. The bill is supported by hotel and lodging associations and tourism agencies. But real estate agents, Airbnb and HomeAway/VBRO are opposed.

Opponents argue that disclosing the names and license numbers of rental units without a subpoena is contrary to federal law.

Gov. David Ige in 2016 vetoed a similar bill.

Another bill would give each county $1 million to set up a registration, property taxation and tracking system for vacation rentals. It’s scheduled to be heard Wednesday by the House Finance Committee.